The impact of microfinance on agriculture productivity: a case study of smallholder maize farmers of Namwala district in Zambia.

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Chabala, Adam
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The University of Zambia
The focus of this study was to explore the impact of microcredit on agriculture productivity based on the setup of smallholder maize farmers of Namwala district. The paper employed a mixed method approach. The sample size that was used in the study was hundred (141) respondents comprising of 70 farmers who had accessed microcredit as the treatment group and 71 farmers who didn’t benefit from credit as the control group, for a 5 year time frame. The Findings show that there is a significant relationship between access to credit and maize production. Also, consistent with the perceptive views of the respondents on the impact of microcredit on maize production, the results showed that an increase in microcredit to the farmers would increase maize production by more than 27% of the initial production. This shows that microcredit has significant impact on maize production. The output levels of the treatment and control group were both analyzed and tested, thereby showing that the amount of inputs acquired through credit had varying impact on productivity with technology having the major influence on agriculture credit with an increase of about 6.914 fold per increase in credit finance directed towards technology. This renders technology advancement as a major component of productivity.Fertiliser and improved seed had 1.419 and 0.385 multiplier impact on productivity respectively. A further quantification of the output of the respondents revealed that credit beneficiaries produced about 4300Kgs of maize after access to credit as compared to 2615Kgs for non-credit beneficiaries. These findings suggest that access to credit has a positive impact on agriculture productivity. In conclusion recommendations were made surrounding the need for easing the access to agricultural credit, reducing the credit interest rate and extending the formal financial intermediation in the rural areas of the district. Easier access to credit will ultimately contribute to higher productivity of the farmers enabling them to attain higher technical efficiency. Keywords: Credit, Impact, Maize, Productivity, Farmers, Namwala
Maize production--Zambia , Agriculture--Economic aspects--Zambia